MCX- Gold (₹27,445)

Gold futures contract on MCX fell over 3 per cent last month breaking below the key 100-week moving average support at ₹27,911. The broader view remains bearish with strong resistance between ₹28,000 and ₹28,500. Though an intermediate bounce to test the ₹28,000-₹28,500 cannot be ruled out, a decisive break above ₹28,500 looks less probable.

A subsequent reversal from this resistance zone will keep the broader downtrend intact. The contract can then fall to ₹26,300. The level of ₹26,300 is a key long-term trend support. The possibility of the current downtrend halting around ₹26,300 and a subsequent reversal from there cannot be ruled out. On the global front, spot gold prices are stuck in between $1,120 and $1,165 over the last three weeks.

A strong break above $1,165 may ease the downside pressure. Such a break can take the yellow metal higher to $1,200. But an immediate break above $1,200 might not be easy for gold. On the other hand if the prices decline below $1,120 it can target $1,100 or $1,080.

Read the rest of this article by Signing up for Portfolio.It's completely free!